Wall Street response to iPhone 4S muted, but optimistic

Following Apple's unveiling of the iPhone 4S on Tuesday, Wall Street's response was relatively subdued, though analysts remain optimistic that Apple sales growth will continue to rise.

Apple took the wraps off the iPhone 4S at its "Let's Talk iPhone" event. The fifth-generation handset is a "world phone" that carries the same external form factor as the iPhone 4, but boasts a faster processor, improved antenna design and new Siri voice recognition functionality.

Shares of Apple experienced volatility on Tuesday in light of Apple's announcements. The stock slide from a close of $374.60 on Monday to as low as $355.18 during the day on Tuesday, before rallying back to close at $372.50, down just 0.56 percent.

The general response by the public appears to be largely underwhelmed. But, several Wall Street analysts noted the disappointment, while also reiterating their confidence in Apple's continued growth.

Piper Jaffray

Piper Jaffray analyst Gene Munster sent a note to investors saying that Apple's announcements at its "Let's Talk iPhone" event were in line with expectations.

"The bottom line is that while investors may be disappointed by the lack of a redesigned iPhone, we believe the iPhone 4S will meet or exceed unit expectations, as it represents the first iPhone launch at two major US carriers (Verizon and Sprint) along with KDDI in Japan," he wrote.

Munster believes the launch of the device will attract long lines, based on survey data from August. According to him, there is pent up demand for the iPhone 4S, as 64 percent of mobile phone users surveyed in August indicated plans to buy an iPhone the next time they purchase a new phone, with 36 percent of those surveyed saying they would wait for the "iPhone 5." But, it should be noted that the survey had a small sample size of just 216 respondents.

Verizon and Sprint are expected to give Apple a sales boost, even without a redesign of the iPhone's externals. Munster remains comfortable with his 25 million unit estimate, given the level of demand expected from the two carriers. According to him, Sprint should have the highest backlog of demand, though large numbers of Verizon customers who passed on the iPhone 4 and have been waiting for a next-generation Apple handset are also predicted to buy the iPhone 4S.

74 percent of Verizon subscribers who do not have an iPhone but plan to buy one as their next mobile phone were waiting specifically for the fifth-generation model, compared to 53 percent of AT&T subscribers, Munster noted.

RBC

Analyst Mike Abramsky said Tuesday that a drop in Apple's stock price was "not unexpected" because the announcements only met expectations. He remarked that updates in the iPhone 4S and iOS 5 are "largely evolutionary," though he did note that the Siri voice assistant was "cool."

The analyst recommends investors buy shares of Apple on weakness, as he remains positive on Apple in the longer-term.

"Similar to the iPhone 3GS (which was evolutionary vs. the iPhone 3G), we believe investors should not underestimate the potential upgrade cycle of the iPhone 4S," he said, adding that RBC survey data shows "unprecedented" demand for the iPhone 4S.

Abramksy sees iCloud and iOS 5 as important differentiators that will help lock users into the Apple ecosystem. Also, the addition of Sprint as an Apple carrier partner will expand the iPhone's addressable market by 25 percent in the U.S.

He pointed out that the new $0 iPhone 3GS will psychologically provide a "compelling offer" to consumers, potential doubling Apple's addressable market to 150 million smartphones per year.

Hmmm. Wall Street and its attitude. Wall Street speculators. Hmm. Who really gives a hoot what Wall Street thinks. What the People think matters more. Oh and thats right what Apple thinks makes a big diff when it comes to my Apple Products. Apple + Liberal Arts + Technology = $$. We buy Apple stock increases and the other guys still don't get it. And yes APL is part of wall street but thats all. Steve and Tim really don't care what Wall Street thinks. They care about the investors and the people buying the product.

OMFG!!!!!! New iPhone! It's still the same old sh__, but it's a little faster! Are you going to wait in line for one? Hey, maybe we can camp out together! I'll bring a Thermos of instant capuccino! We can burn our current iPhone 4 contracts for warmth!!

It only took 16 months to figure out how to fit an A5 in the iphone 4!!

Won't make much difference. It looks to me like Apple's gamble will pay off, and the iPhone 4S will be the best selling iPhone yet. Life will go on.

Truly though. With or without a redesign, the internals and software would have been identical, and that is what drives these product. iOS 5, iCloud, and the A5 processor are a match made in heaven, and the experience of owning and using a 4S is going to be the same as a mythical 5.

Well, after the day Netflix pissed their customers off, Wall Street was very happy too bringing NFLX shares to the record high levels. Now we all know how it ended up.
You just can't be so arrogant to your fans...

What the hell were they doing for 16 months? A5 existed since iPad-2 launch, casing is the same, same old dwarf screen...

Fat Cats on Wall Street who can't wipe their own a$% because their stomach is too big. They gotta use a bede'. Did I spell that right? Any way at least the toilet paper shortage won't suffer because of Wall Street.

OMFG!!!!!! New iPhone! It's still the same old sh__, but it's a little faster! Are you going to wait in line for one? Hey, maybe we can camp out together! I'll bring a Thermos of instant capuccino! We can burn our current iPhone 4 contracts for warmth!!

It only took 16 months to figure out how to fit an A5 in the iphone 4!!

Why do you have such a problem with the iPhone 4S... you don't seem to mind dragging out the same old shit every day... and you're not even a little faster.

Hmmm. Wall Street and its attitude. Wall Street speculators. Hmm. Who really gives a hoot what Wall Street thinks. What the People think matters more. Oh and thats right what Apple thinks makes a big diff when it comes to my Apple Products. Apple + Liberal Arts + Technology = $$. We buy Apple stock increases and the other guys still don't get it. And yes APL is part of wall street but thats all. Steve and Tim really don't care what Wall Street thinks. They care about the investors and the people buying the product.